Trivia

Bitcoin is on a rollercoaster but there are common scams to avoid

Updated: Jul 30, 2024

Published: Dec 17, 2020

Bitcoin is on high after setting a new record of more than $23,000. Those that have previously dismissed bitcoin as a fringe financial asset are thinking again as institutional capital flows into the market. The interest in bitcoin is growing, and these common scams are expected to rise as newbies dip their feet into the emerging market.

It all starts with research

The first step towards long-term success in buying, selling, or storing cryptocurrencies starts with something as simple as a digital wallet. A digital wallet is a software program that gives you a set of public and private keys that enable you to send and receive digital assets.

The public key is more like your bank account number while the private key is your PIN number. Keep your private keys safe because whoever has access to them has access to your money.

Those in the space will tell you that “Not your keys, not your money.”

There are a lot of wallets designed for mobile devices or your computer. Do your research and find the one that serves your needs best without compromising your security. The cryptocurrency market is known for outrageous heists as much as it is known for its volatility.

Read the reviews of the wallet you have chosen. If possible, ask around from those that have been in the game long before you. There is a huge difference between traveling with someone who knows how to read a map and someone who has traveled the actual terrain.

You will likely need an exchange to trade cryptocurrencies. An exchange is a marketplace where traders or enthusiasts buy, sell, trade, or hold digital assets. Exchanges are ‘walking targets’ as they attract hackers who are out to make a quick buck.

Again, do more research about exchanges. Find how long an exchange has been operational and whether it has been breached before.

The blockchain forensics firm CipherTrace claims that bad actors made off with $1.8 billion in cryptocurrency linked crimes in the first 10 months of 2020.

Phishing scams

Phishing attacks involve attackers posing as legitimate services or companies that communicate with you via emails or text-based messaging with the aim of getting your personal information.

From the surface, the emails look legitimate and as if they are coming from legal companies or services. If you fall for this scam, you will give away your keys or send bitcoins to a wallet controlled by the scammer.

Beware of supposed free bitcoins

There is nothing like a free lunch. The same goes for bitcoins. You won’t get them for free. In July 2020, scammers took control of Twitter accounts of high profile people that include Elon Musk, Bill Gates, Jeff Bezos, Joe Biden, Kim Kardashian, Floyd Mayweather, and more.

The scammer(s) asked users to send bitcoins to a given wallet address and receive the double amount as a goodwill gesture. Many people fell for the scam. The hackers received 12 bitcoins (valued at $118,000 at the time) from 320 transactions.